The dollar slipped below 92 US cents overnight for the first time since March. Photo: Bloomberg

Wednesday's declines added to the downward momentum developed overnight, when the local unit touched US91.88¢ in late New York trading before recovering to just above US92¢ . A weaker-than-expected consumer sentiment survey added to the sell-off.

The Aussie is now outside outside its US92¢-to-US95¢ band for the first time since late March.

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The slip reflects growing support for the US dollar, as markets start to price in monetary tightening by the Federal Reserve, which is expected to provide more details on its policy schedule after an Open Market Committee meeting next week.

The Fed is set to end its asset-buying, quantitative easing program in October and is likely to start lifting interest rates before the middle of next year. In the meantime, it will need to draw liquidity away from the short end of the bond yield curve through a series of complex market operations.

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Surging investor demand for the greenback drove the world's reserve currency to fresh highs against most of the other major currencies overnight. Against the yen, it climbed to a six-year high, while the beleaguered euro dropped to a 14-month low against the dollar before bouncing back slightly.

US equities sold off, with the Dow Jones Industrial Average down 0.6 per cent on the session.

"The rise in Treasury yields and decline in US stocks confirm that investors are pricing in tighter monetary policy from the Federal Reserve," BK Asset Management Managing Director Kathy Lien said.

"This does not mean that the market expects the Fed to raise rates soon but ending quantitative easing in October is a move to unwind and not increase stimulus."

With other major economies such as Japan and the European Union forced to extend their monetary easing to combat economic stagnation and deflationary pressures, the allure of the greenback can only grow, she said.

In the United Kingdom, meanwhile, the looming threat of Scottish independence has worked against what should have been a rally in pounds sterling. With UK recovery continuing apace, the Bank of England is widely expected to be the first central bank of the main global economies to starting lifting interest rates.

Bank governor Mark Carney confirmed this overnight, saying that a (northern) Spring rate rise would be consistent with the BoE's mandate.

However, the UK currency has been pummelled in recent weeks over fears that a break-up of the Union would force the Bank to postpone this tightening. There are also concerns about Scotland's share of the UK's national debt and the integrity of the government bond market.

The pound did, however, recover some lost ground after governor Carney's comments.

In Wednesday morning trade in Australia it was fetching about $US1.61, compared with a recent low around $US1.60. It was also buying close to $A1.75, after climbing back from a year-to-date low around $A1.72 on Monday.

The Australian currency, meanwhile, is expected to come under renewed pressure on Wednesday if a private sector consumer sentiment survey shows lingering softness in the Australia economy.

Housing data and a business confidence survey released on Tuesday showed the economy remained subdued after a slowdown in June-quarter gross domestic growth.

If this piece of data also surprises to the downside, the Australian dollar could hit US91.50¢.